America's Iran Deal Exit Could Wreck the Afghanistan-Pakistan Relationship
Some South Asia observers have argued that the Trump administration’s decision to exit the Iran nuclear deal will hurt U.S. efforts to stabilize Afghanistan. Their reasoning: it reduces the viability of the Iranian port of Chabahar, which India aims to use as an alternate gateway to Afghanistan, bypassing the land corridor through Pakistan. Chabahar, these observers believe, is crucial to decreasing Afghanistan’s reliance on Pakistan for trade and expanding the exports of the aid and narcotics-dependent country.
The reimposition of sanctions on Iran and the danger of secondary sanctions will indeed inhibit foreign investment in Chabahar. But the port project is already struggling. For over a year, New Delhi has struggled to secure a private sector partner for operating the port terminal, reissuing the tender several times.
But not only is the promise of Chabahar overblown, pushing Afghanistan’s economy toward greater integration with Iran could increase Kabul’s dependence on Tehran.
Landlocked Afghanistan has historically relied on Pakistan’s two major ports, Karachi and Port Qasim, for access to sea, reaching them via the border crossings of Chaman and Torkham. The Obama administration invested considerable energy in expanding trade linkages between Afghanistan and Pakistan. It helped push forward the 2011 Afghanistan-Pakistan Transit Trade Agreement (APTTA), which broadened Afghanistan’s transit trade options through Pakistan.
APTTA—which has since expired—provided Afghanistan with access to an additional Pakistani port (Gwadar); another border crossing into Pakistan (Ghulam Khan in North Waziristan); and an international border crossing (Sost in Gilgit-Baltistan, connecting to China). The agreement also enabled Afghan trucks to carry goods through Pakistan and return home with Pakistani products. It continued to permit Afghan exports to India via Wagah, Pakistan, but fell short of allowing Indian exports to Afghanistan via Pakistan. APTTA also provided Pakistan with reciprocal access to Central Asia via Afghanistan.
In addition to trade facilitation, the Obama administration disbursed through USAID roughly $200 million in funding for the upgrading of highways in Afghanistan and Pakistan connecting the two countries via the Ghulam Khan and Chaman border crossings. These projects have all been completed.
Since 2016, however, Afghanistan has shifted much of its transit trade to Iran—mainly via its largest port, Bandar Abbas. There have also been some symbolic shipments from the Chabahar port, located around fifty miles from Pakistan’s Gwadar port.
The tilt toward Iran marked a detour from Ashraf Ghani’s initial efforts to build ties with Pakistan, with a considerable focus on trade. Roughly a year after coming into office in 2014, Ghani gave up his outreach to Pakistan as conditions in his country worsened. He made clear publicly and privately that he would use trade as a lever vis-à-vis Pakistan. In 2016, bilateral trade between Afghanistan and Pakistan dropped by half and Iran emerged as Afghanistan’s largest trade partner.
Pakistan bears some responsibility for the decline in bilateral trade with Afghanistan. It has imposed heavy tariffs on some Afghan imports and has been inefficient in clearing Afghan shipments. Pakistan also shut down major border crossings with Afghanistan for a combined two months in 2017. But, it should be noted, these measures were taken in the wake of terrorist attacks in Pakistan originating in Afghanistan and after Afghan security forces fired on Pakistani census workers near the border.
Despite U.S. investments in Afghanistan-Pakistan connectivity, Ghani’s embrace of Chabahar was mirrored by senior Trump administration officials, who spoke favorably of the project till last month’s exit from the nuclear deal. It’s possible that the promotion of Afghan use of Chabahar was notionally part of the Trump administration’s half-baked “South Asia strategy.”
Chabahar is of value to Afghanistan, but not as a replacement for Pakistan’s ports. Afghanistan is poor and landlocked. It has an import-based economy and runs trade deficits across the board. Chabahar makes sense for Afghanistan as part of a diversification strategy that is regionally-focused. It can be used to grow trade with India. And it can serve as an alternate port for western Afghanistan, which not only borders Iran, but is strongly integrated with its economy.
For the rest of Afghanistan, especially its eastern population centers, the best bet for maritime trade is Pakistan. Karachi, Port Qasim, and even Gwadar are physically closer to Afghanistan eastern and southern population centers, providing cost and time advantages over Chabahar. With the extension of the Peshawar-Islamabad-Lahore motorway to Karachi by 2020, Afghanistan will have access to a controlled access, high-speed road network connecting to Pakistan’s two major ports. The network could be extended to Kabul with the World Bank-funded Peshawar-Torkham expressway—the construction of which will begin this year—and a proposed motorway from Torkham to Kabul via Jalalabad.